Lindsell Train favourite LSE targeted in £32bn offer

London Stock Exchange is a top holding in four Lindsell Train portfolios

Nick Train portfolio favourite London Stock Exchange Group (LSEG) has been the target of an unsolicited bid from the Hong Kong Exchanges and Clearing (HKEX).

LSEG is the fourth largest holding in the £7.4bn Lindsell Train UK Equity fund, fourth largest in the £9bn Lindsell Train Global Equity fund, second largest in the £268m Lindsell Train Investment Trust, and fourth largest in the £1.9bn Finsbury Growth & Income Trust, according to the latest factsheets.

On Wednesday HKEX made a £32bn bid to buy LSEG with the aim of disrupting its deal, agreed last month, to acquire Reuters’ financial and risk business Refinitiv for $27bn.

The LSEG/Refinitiv tie-up had already been welcomed by Train (pictured).

LSEG is also the sixth largest holding in the Blackrock UK Equity fund run by Luke Chappell, Roland Arnold and Nicholas Little.

Portfolio Adviser contacted representatives for Lindsell Train and Blackrock for comment.

‘Unsolicited, preliminary and highly conditional’

In a statement to the market, LSEG said it had acknowledged the “unsolicited, preliminary and highly conditional” approach from HKEX.

It added: “The board of LSEG will consider this proposal and will make a further announcement in due course.”

LSEG said it remains committed to and continues to make good progress on its proposed acquisition of Refinitiv and is expecting to seek shareholder approval of the deal in November. The deal is set to complete in the second half of 2020.

Refinitiv deal a stumbling block

In March 2017, LSEG had a potential £24bn tie-up with counterpart exchange Deutsche Boerse vetoed by the European Commission over competition concerns.

Analysts at Bloomberg said if HKEX succeeds in its offer for LSEG, the combined company would leapfrog CME to become the world’s largest exchange.

Their note added: “We suspect that any regulatory issues would be small compared with the political problems that dogged the Deutsche Boerse tie-up. With a premium of 23%, HKEX’s bid will be subject to resolution of LSE’s $27bn offer for Refinitiv, as well as other regulatory questions.”

Interactive Investor head of markets Richard Hunter said: “Part of the proposal requires that the Stock Exchange back away from its recent $27bn deal to acquire Refinitiv, which appears to be an early stumbling block. The initial response from the Stock Exchange, which describes the approach as ‘unsolicited, preliminary and highly conditional’, is one which it will consider.

“The proposal is a fascinating prospect, but far from a done deal. The fact that the LSE share price has already retreated from the initial 10% spike on release of the news may reflect some initial scepticism around the likelihood of the deal going through.”


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